GM Finance subpoenaed over subprime auto loans

OVER AGAIN HAS LANDED HIM IN HANDCUFFS AND PUTTING OTHERS IN HARM'S WAY. Carmen: GENERAL MOTORS HAS MAJOR AND EXPENSIVE PROBLEMS WITH THE IGNITION SWITCH RECALL, BUT NOW ITS FINANCING ARM IS LOOKING AT MORE BIG AND EXPENSIVE LEGAL TROUBLES. LET'S GO TO BUSINESS EDITOR ROD MELONI. HE JOINS US LIVE DOWNTOWN WITH THE STORY. ROD, WHAT IS IT THIS TIME? Rod: CARMEN, IT'S NOT IGNITION SWITCHES, IT'S SUBPOENAS. WHEN YOU HEAR FROM THE JUSTICE DEPARTMENT, IT'S NOT GOOD. BUT THEN SUBPOENAS, IT'S NOT REAL GOOD. THE CAPTIVE FINANCING ARM WHERE THEY PAY OR DO THE LENDING FOR BUYING CARS, THAT'S WHAT'S IN TROUBLE RIGHT NOW. SECURITIES LAW REQUIRES A PUBLIC COMPANY TO DISCLOSE THESE KINDS OF PROBLEMS. SO TODAY GM FINANCIAL DID THAT IN THIS DOCUMENT TELLING SHAREHOLDERS ON JULY 28, 2014, GM FINANCIAL SERVICES WAS... Rod: AMONG OTHER MATTERS, IT REQUESTS INFORMATION REGARDING THE UNDERWRITING CRITERIA USED FOR THE AUTOMOBILE LOAN CONTRACTS. Rod: THERE'S A LOT OF LEGAL GOBBLITY GOOK IN THERE. AND SEVERAL YEARS AGO, ALLY FINANCIAL, WHICH WAS IN BANKRUPTCY, ENDED UP GETTING FINED FOR DISCRIMINATORY AFRICAN-AMERICAN AND ASIAN CAR BUYERS, CHARGING THEM TOO MUCH MONEY. THE JUSTICE DEPARTMENT ISN'T SAYING MUCH. BUT IT LOOKS LIKE THOSE TWO CASES APPEAR CONNECTED. WHERE THIS WILL TAKE US, WELL,

NEW YORK -

GM Finance says it has received a subpoena from the U.S. Department of Justice for documents related to subprime auto loans.

The affiliate of General Motors Co. said in a filing Monday with the government that the Justice Department requested documents related to the origination and securitization of subprime auto loan contracts since 2007.

Subprime loans generally are made to borrowers with questionable credit repayment histories.

GM Finance said the Justice Department is considering a civil lawsuit for potential violations of the Financial Institutions Reform, Recovery and Enforcement Act, a federal law that was passed following the savings and loan crisis in the 1980s.

General Motors Financial Co. said it received the subpoena on July 28. It disclosed the request in a filing with the Securities and Exchange Commission.

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